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Hungary / Constitutional Court / 3143/2015 (VII. 24.)

Financial institution constitutional complaint

Policy area:
Consumers
Deciding Body type:
National Court/Tribunal
Deciding Body:
Constitutional Court
Type:
Decision
Decision date:
24/07/2015

Key facts of the case:

The petitioner, a financial institution submitted a constitutional complaint against two lower courts’ judgments, the Curia Unity of Law Decision no. 2/2004 and Act no. XXXVIII of 2014. The Curia (Hungary’s supreme court) in the unity of law decision declared that the fairness of the clause of the foreign exchange loan agreements under which the risk of foreign exchange is borne by the customer can be challenged only if the clause was not clear and understandable when the agreement was concluded. Act no. XXXVIII of 2014 repealed the exchange rate gap clauses and set a fixed rate. The Act introduced a statutory presumption of unfairness for the unilateral amendment option clauses which allows financial instituttions to increase its interest rates, costs and fees, and prescribed the procedure in which the presumption could be rebutted by the financial institutions.  The Act retroactively established conditions against which the fairness of the unilateral amendment option clasuses was to be assessed and mandated a procedure with short deadlines and limited the possibility to present evidence. The petitioner claimed that his right to property and to a fair trial were therefore violated by this Act.

Outcome of the case:

The Constitutional Court rejected the constitutional complaint. The Court argued that the further limitation of the time period did not constitute retroactive legislation: the original version of Act no. XXXVIII of 2014 was reviewed and declared constitutional by the Court, the amendment merely added a more concrete time-frame to the already existing procedure for the future. The challenged rules – in the Court’s view – could not lead to a direct violation of the right to property as it primarily protects already acquired property and only exceptionally future acquisitions. The Court argued that the challenged rules cannot be correlated with the right to property as there is no substantive connection between them. Furthermore, the Court rejected that as a result of the amendment of Act no. XXXVIII of 2014 the petitioner did not have sufficient preparation time for the litigation: the new rules proportionately allowed the judicial procedures seeking the rebuttal of the presumption of unfairness.